Sears sticks to 1st bid for Canadian business

Sears Holdings Corp. has waived a condition that it receive majority shareholder support for its $730 million bid for Sears Canada Inc., after some shareholders said the offer is too low.

The Hoffman Estates-based retailer, which owns 54 percent of the Canadian business, said it will buy all stock tendered to its offer of about $14.80 a share even if a majority of shareholders refuse to tender their stock.

"While we would prefer to own 100 percent of Sears Canada, we are committed to increasing our ownership through this offer in any case," Sears Holdings said. The board is "fully committed" to the offer price, the company said in the statement without elaborating.

Sears Holdings Chairman Edward Lampert offered to buy the rest of Sears Canada to reduce costs and increase profit in what the parent has called an "increasingly competitive" department-store market. The original offer was conditional on getting at least 50 percent support of Sears Canada shareholders.

"He's going to go and see what he can get [at $14.80]," said Ronald Mayers, head of alternative strategies at Montreal-based Desjardins Securities Inc. "There's no reason for him to raise his bid at this point in time."

Sears Canada shares fell 7 cents Monday, to close at $18.60 in Canadian dollars ($16.26 U.S.), on the Toronto Stock Exchange. The shares have traded close to $18 since Sears Holdings announced the bid, indicating some investors expect the company to raise the offer.

Desjardins values Sears Canada at roughly $19.60 a share, assuming the company will sell real estate and lease it back, said Mayers. If Lampert doesn't get 50 percent of the shares, he could raise the bid before it expires, Mayers said.

Sears Holdings plans to mail the takeover offer to shareholders this week.

Sears Canada expects to receive an evaluation on the fairness of the parent company's bid this month from Genuity Capital Markets, a Toronto-based investment bank.

The Canadian company, based in Toronto, last week said profit, excluding some costs and gains, rose 17 percent as sales at stores open at least a year increased 1.1 percent, beating some estimates. But Brathwaite said, "We do not believe that the fourth quarter represents a turnaround in Sears Canada's business prospects."

Shares of Sears Holdings fell $1.79, to $117.65, on the Nasdaq stock market.